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Don't roll back tax sops, focus on tax reform: Experts to Govt

business Updated: May 17, 2009 15:03 IST

The new UPA government should not roll back tax cuts but focus on tax reforms like starting GST from next fiscal and putting in place a new direct tax code to replace the Income Tax Act to boost economy, analysts have said.

"Reduction in excise duty just let them be. They should not be rolled back," economic research body ICREAR director Rajiv Kumar told PTI.

Foundation for Public Economics and Policy Research Director Mahesh Purohit said cuts in service tax and excise duty should not be rolled back either.

To spur the economy, facing slowdown under the impact of global financial crisis, the government had announced three stimulus packages by cutting the excise duty by six per cent and the service tax by two per cent, among other fiscal sops.

Aseem Chawla of the leading law firm Amarchand Mangaldas also said," I don't think it should be rolled back for the time being."

While Purohit said the country will soon move towards Goods and Service Tax (GST) and the rates for excise duty or service tax cannot be more than GST.

Rates of GST, proposed to be implemented from April 1, 2010, have not been decided yet. GST will replace excise duty, service tax at the Centre and VAT at the state levels.

The Congress in its election manifesto had said that it would take decisive step and introduce a moderate tax.